Why Kolkata loves to shop

An ongoing study at Indian Statistical Institute (ISI) has revealed that Kolkata has the highest per capita purchasing power among all metros. The reason: smaller population and low poverty compared with other metros.

Household expenditure in Kolkata was found to be Rs1,822 per person per month on an average, which is way above Delhi, Mumbai, Chennai and Bangalore.

Data for the study was collected in 2004-05 by the National Sample Survey Organisation (NSSO). The data collected by NSSO was adjusted for regional price variations and differences in cost of living in each city, according to Buddhadeb Ghosh, associate scientist at ISI’s economic research unit, who is conducting the study.

Many people that Mint spoke to were initially skeptical about the study.

For instance, Jatinder S. Dhindsa, regional manager of Maruti Suzuki India Ltd in Kolkata, who said “...Kolkata is yet a very important market for our company, but it’s very surprising that purchasing power in Kolkata is higher than in Delhi or Mumbai.”

The high per capita purchasing power in Kolkata is a function of small population and low poverty “in the area that was considered as Kolkata under the study”, said Ghosh.

“We only considered the area under Kolkata Municipal Corporation, where the total population is only 4.1 million. Also, poverty is very low— only 2.28 per cent.”

To be sure, Kolkata is much bigger than the 141 municipal wards of the Kolkata Municipal Corporation, or KMC. Greater Kolkata and neighbouring Howrah—the town across the Hooghly river—combined, the city has a population of 15-16 million.

The study indicates that the area under KMC, which is roughly 185 sq. km, has largely remained the preserve of families that have been living there for generations, according to Ghosh. “However, even if Howrah and the extensions of Kolkata in the north, south and the east, were considered, the figure (for per capita purchasing power) wouldn’t be significantly lower though it wouldn’t be as high as in the area under Kolkata Corporation only,” he added.

“I wouldn’t comment on a study that hasn’t been concluded,” said Asim Dasgupta, West Bengal’s finance minister. “...In Kolkata, consumption of durables and the propensity to save are high.”

Real estate developers tasted Kolkata’s purchasing power during the recent economic downturn. Whereas real estate prices in other metros such as Delhi and Mumbai crashed last year, they declined by up to 14 per cent only in Kolkata.